Predicting the future
The crystal ball concept is a good one. If we could just see into the future, we would know if Decision A leads to Outcome A, or if we choose Decision B, what change does that make to give us Outcome B? The North Dakota Legislature frequently asks these types of questions, and now with the Dynamic Revenue Analysis software purchased since the last session, it is closer to more defined answers.
Dynamic Revenue Analysis is a forecasting technique that incorporates predictions about the behavior of people and organizations based on changes in fiscal policy, usually tax rates. It is often used to analyze how policy changes could affect government revenues and expenditures, and potential budget impacts that may ensue. Prior to using the software, a static scoring system would assume behavior didn’t change so the financial impact of decisions that was presented was more basic.
The 2017 Legislature passed SB2044 which directed Bank of North Dakota (BND) to develop the ability to conduct “dynamic revenue analysis of economic development tax incentives and dynamic fiscal notes.” A software package called Regional Economic Modeling Inc. (REMI) was purchased and BND retained FTI Consulting to assist in managing and running the program. An inter-agency management team was created to oversee the software’s implementation and results that includes employees of the Legislative Council, ND State Tax Department, Office of Management and Budget, the Chair of the Interim Tax Committee and BND.
Click here to listen to Kelvin Hullet, Bank of North Dakota’s Economic Development and Government Program Market Manager, talk about REMI and how it is already being used by the North Dakota Legislature for research.
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